U.S. Energy Efficiency Tax Incentive Extenders await President Bush's signature.

By Tom Routley

Burlington, ON, May 22, 2008-A number of US tax incentives intended to encourage investments in renewable energy are due to expire December 31, 2008 under existing federal legislation. And, as is so often the case with US incentive legislation for things like renewable energy and research and development, we are now engaged in the annual “extender” waiting game.

The House has just passed the Renewable Energy and Job Creation Act of 2008 on May 21st with a host of energy extenders. The Senate had already done its bit, by including one year extensions for a number of energy efficiency incentives in bill S. 3221, passed in April and aimed primarily at homeowner relief.

After Memorial Day it is expected that the Senate Finance Committee will mark up its own extender legislation, containing a package of energy extenders similar to those just passed by the full Senate in bill S. 3221. Following that the Joint Committee on Taxation will attempt to find revenue offsets for the extenders in order to try and avoid a President Bush veto.

Notwithstanding the operating assumption that extenders will come through with respect to the energy-efficient building deduction, Washington has not always been able to deliver on expectations, especially in the volatile world of energy. If this is the case, now might just be a good time to start work on that lighting retrofit capital expenditure program, for example, while the tax incentive is still available through December 31, 2008.

For a more in depth look at both American and Canadian energy efficiency tax incentives, please refer to our previous article on this topic: Using Tax Incentives to Pay for Energy Projects. This article provides commentary on last year's legislative extender game between the House and Senate, where the exact same tax issues were up for debate.

Don’t hesitate to contact us if you would like to discuss any of the energy efficiency tax incentives. As we have noted before, you can only take full advantage of these various tax incentives if you know enough about them. In the meantime, stay tuned. Come back to our website as June unfolds and we have the final set of extender rules!

Tom Routley is a Chartered Accountant with an undergraduate degree in engineering. He has over 25 years of extensive experience in both the Canadian & US income tax rules related to energy tax incentives, tax-efficient financing and R&D tax incentives. He works at Energy Advantage Inc as an independent consultant with a focus on tax incentives.